Abad pet project: Credit card better than cash in DND

03:13 AM September 8th, 2013

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September 8th, 2013 03:13 AM

Corporate credit cards will replace the “petty cash” system in making small purchases at the Department of National Defense (DND), in line with the Aquino administration’s policy of transparency in government.

Starting this month, cash will no longer be used to purchase plane tickets, emergency medicine, groceries and other small items for the various service units of the Armed Forces, the Department of Budget and Management (DBM) announced Saturday.

“This is just a baby step. If this is successful, we can roll this out to other departments,” said Budget Undersecretary and Chief Information Officer Richard Bon Moya.

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The switch to more cashless transactions in government is a pet project of Budget Secretary Florencio Abad, Moya said.

Because electronic payment methods are more efficient and transparent, the government stands to save “billions of pesos” every year as it will minimize leakages from corruption and the costs related to the handling of cash, he said.

Moya said the project would have been implemented last year, but the DBM had to secure the Bangko Sentral ng Pilipinas Monetary Board’s approval because the use of credit cards by government agencies essentially meant the state is taking out a loan.

Ninety-eight percent of all transactions in the country were still done using cash, according to a recent survey by the Better Than Cash Alliance, a multinational nongovernment organization that advocates the use of more efficient electronic payment methods instead of coins and notes.

The Monetary Board has given its approval of the use of credit cards for small transactions at the DND.

The switch to credit cards at the DND is one of the first steps in the policy to digitize all government transactions, Moya said.

The DND was chosen for the pilot project, as the department has a reputation for bad record-keeping when it came to funds, he said.

The DBM will also be taking part in the pilot project, which is being undertaken in cooperation with the Better Than Cash Alliance.

The Better Than Cash Alliance was founded by the Bill and Melinda Gates Foundation and is partly funded by US financial giant Citi.

The government credit card works much the same way as a corporate credit card, Moya said. Credit limits will be determined based on past spending patterns of the DND’s service units—the Army, Navy and Air Force.

The use of the cards will also be limited to certain kinds of establishments to avoid abuses.

“If they try to use it in restaurants and bars, the cards will be declined,” Moya said.

He clarified that the cards are not meant to augment the petty cash budgets of the agencies involved. Instead, the cards will replace the cash that was previously used as the sole mode of payment.